CLA-2-CO:R:C 544936 RA
TARIFF NO: 807.00, TSUS
District Director of Customs
3600 Paisano
Room 134 Bldg. B
El Paso, Texas 79905
RE: Substantial transformation of circuit board components
Dear Sir:
This ruling is in response to the applications for further
review of protest numbers 2402-5-000019-21-24, dated May 29,
June 3, and July 15, 1985. The protests were filed against the
liquidation of entries Nos. 84-819178, March 16, 1984, 85-
809844-2, December 17, 1984, and 85-812572-6, January 14, 1985.
ISSUE:
The question raised in the protest concerns the
applicability of item 807.00, Tariff Schedules of the United
States (TSUS), to circuit boards used as components in a Mexican
assembly operation. When exported from the United States, the
boards consisted of printed circuit boards containing foreign-
made electronic parts which were automatically inserted by
machine and crimped but not soldered in place. The specific
issue is whether the inserted components and the boards were
substantially transformed into new and different articles of
United States origin and, therefore, qualified as domestic-made
fabricated components for item 807.00, TSUS, purposes.
FACTS:
The various electronic parts were inserted into the printed
circuit boards in the United States by computer programmed
automatic insertion machines and the short leads were crimped to
hold them in place. The parts were not permanently soldered but
would have to be uncrimped before they could be separated from
the board. If separated, they could not be reused in the
automatic insertion process.
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LAW AND ANALYSIS:
The protestant claims that the foreign-made components
have been substantially transformed by their insertion into the
circuit boards and, therefore, the exported complete boards
qualify as United States products eligible for item 807.00, TSUS,
treatment when the articles in which they are assembled abroad
are imported. In our ruling of March 5, 1986 (553945), we held
that similar circuit boards composed of foreign-made electronic
components inserted and crimped by an automatic machine had been
substantially transformed into products of the United States.
The facts in this case were distinguishable from those
present in our ruling of October 16, 1980 (063647), published as
Legal Determination 81-0041 of April 2, 1981. The electronic
components in that ruling were placed on the circuit board in a
tentative fashion and could be removed and reused. It was
pointed out that the result would be different if the components
were affixed in some permanent manner prior to exportation.
In the instant case, the electronic components are inserted
into the printed circuit boards by computer-programmed automatic
machines and the leads are securely crimped and slightly beveled.
If after insertion, any component has to be removed, it would not
be useable and would be scrapped. There is an irreversible
commitment to utilize the inserted components in the manufacture
of the printed circuit boards and their attachment is permanent
even though there is a subsequent soldering to insure good
connections. An examination of the submitted sample clearly
demonstrates that the individual components have lost their
separate identity and became integral parts of the exported
circuit board.
Accordingly, it is believed that the operations have
resulted in a substantial degree of permanence and the identity
of the foreign components was lost and became subordinated and
merged into a new identity with a new name, character and use.
While the components inserted into the boards can be removed with
some difficulty, this would not be economically feasable as the
crimping of the short leads results in deformed components when
they are removed which could not be reused in an automatic
process.
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CONCLUSION:
We are accordingly of the opinion that the automatic
insertion and crimping operations performed prior to exportation
of the circuit boards are sufficient to render them domestic
products which are entitled to tariff treatment under item
807.00, TSUS, upon compliance with the Customs Regulations. On
this basis, the protest should be allowed and a copy of this
decision should be attached to your Form 19 Notice of Action to
be sent to the protestant.
Sincerely,
John Durant, Director
Commercial Rulings Division